GM supports legislation banning rentals, sales of cars under recall

General Motors Co. is the first big automaker to support legislation barring rental-car companies from renting or selling vehicles subject to a recall.

General Motors Corp. headquarters are shown in Detroit. — File photo by The Associated Press

GM’s support was announced Wednesday by bill author Sen. Charles Schumer, D-N.Y. GM endorsed the bill after language was inserted clarifying that automakers couldn’t be charged by rental-car companies for lost use if rentals were grounded while they were being repaired, Schumer said in a news release.

Detroit-based GM sent Schumer a letter within the past week expressing its support. Schumer’s announcement came a day before GM CEO Mary Barra and the company’s general counsel appear before a Senate subcommittee investigating GM’s decade-delayed recall of millions of small cars for flawed ignition switches. The problem has been blamed for at least 13 deaths.

Under the bipartisan legislation, defects in cars under recall would have to be repaired before the cars could be rented or sold. It is supported by major rental car companies and several consumer groups.

The legislation is named for Raechel and Jacqueline Houck, two young sisters from California who died in a fiery crash in 2004. They were driving a rental car that had been recalled for a hose defect in the power steering, where a leak could cause a fire in the engine compartment.

While current law prohibits car dealerships from selling recalled vehicles to consumers, no law bans rental-car companies from renting or selling them to unsuspecting consumers — a loophole that must be closed, senators say.

In a statement quoted in Schumer’s release, Barra said GM’s discussions on the bill with Schumer and the other sponsors resulted in changes that addressed the company’s concerns. As a result, “GM is able to support their legislation,” Barra said. “If enacted, it will give those who rent a vehicle, regardless of make or model, the peace of mind that the car they are in is safe.”

Schumer said he hoped that GM’s support would open the door “for more car manufacturers to do the right thing” and endorse the bill.